Interview with Dmitry Medvedev

DIRECTOR OF NEWS PROGRAMMES AT CHANNEL ONE KIRILL KLEIMENOV: Dmitry Anatolyevich, thank you for the invitation.

In this new format last time you talked about the situation in our country in the context of the crisis. And we'll probably continue that conversation today, but I would like to start with a different theme. You have returned to it repeatedly over the past year and during the election campaign too, and that is the issue of combating corruption. This week the Anti-Corruption Council met. In your view how successful have efforts to break this deadlock been?

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Good afternoon, Kirill.

Of course I would say that until now if there have been successes they have been very small ones indeed. But in my opinion we have taken a definite step forward. What step exactly? For the first time in the entire modern history of our country we have created a new regulatory framework for combating corruption. I remember how much we talked about this in the 90s and in the last decade: let's adopt this law, let's adopt that one, let's see what will happen, let's subscribe to the international conventions. And now I believe that we have created a proper legal framework. This doesn't mean that it's perfect, but it is up to date. Let me repeat, this is a first one in recent years.

And if we are speaking seriously, this really is a first, because in the Soviet era this phenomenon had a different shape and provoked different sorts of legal reaction. This means that we have moved forward. Now comes the most difficult part, the period during which we have to implement these laws. I think that here we will have to confront different challenges, including those associated with our unwillingness to act on our authority, our unwillingness to confront issues that have traditionally been left hidden. For example, this week at the Council, as you mentioned, the question of the declaration of individual income and property of those in power came up. Well this is just so basic: almost all civil servants file such declarations annually. Nevertheless, there is an important new statute. Now other sorts of property will be subject to declaration, and not only public servants will be obliged to file them but also members of their family, and this changes the whole situation. Of course it might immediately be objected that someone who wants to hide his income can transfer it to some outsider or hide everything in some offshore account. Of course that could happen. Nevertheless, we have significantly expanded the state's powers in this area. And everyone will have to decide for himself: tell the truth about the income and property he or she owns, or hide it. And this, as you know, is finally a moral question.

By the way, I believe that this sort of solution must begin at the top. Therefore I have decided that the President will also have to declare his annual income. Current legislation does not require him to do so. And such declarations usually occur only in the run-up to an election. I will specifically mention it in the presidential decree that the President is required to submit such a declaration every year, just like every other public servant.

KIRILL KLEIMENOV: And do you intend to do it this year?

DMITRY MEDVEDEV: I certainly will do it this year. I hope that my example will be followed by other public servants, so let me drop them this hint.

KIRILL KLEIMENOV: It's no secret that some people who end up in power pursue their own interests and that sometimes - let us speak frankly - these are criminal interests. In early March all over Russia there were elections at various levels; in other words there was a sort of political renewal. But of course an election is always an opportunity to get rid of the inefficient and dishonest people.

In the context of the fight against corruption, do you see any positive developments in this regard, especially in light of the particular challenges facing authorities in the current crisis?

DMITRY MEDVEDEV: The fight against corruption is always difficult because it is a systemic problem. The fight against corruption in our country is a particularly difficult challenge that will require tremendous effort and real perseverance. Of course it has to be carried out over years. But already today I can say that we have made some progress. According to statistics that I have been given, over the past year there have been 40 thousand criminal cases brought against those who violate state rules while in public service or local government. I am not even commenting on whether this is a big number or a small one, although it is more than in 2007. Some 12 thousand of these cases involved bribes. Those are hard cases that are very difficult to prove. Nevertheless, I hope that the majority of these criminal proceedings will be brought to a conclusion and result in guilty verdicts if the investigation shows that crimes have been committed by the public servants in question.

As far as specifics are concerned, as you know life in general consists of specific situations. In my view, in recent years the steps that have been taken show how serious the authorities are in this regard. And a number of large, so-called high-profile cases against officials in the Orel Region, in the Perm Region and in Primorsky Region have demonstrated our determination to eliminate such actions, because the fight against corruption consists of two parts: the first involves punishing those who are guilty of misconduct, and the second and perhaps the most difficult is establishing a system of motivation for the others to make sure they don't engage in corruption. In this sense, I think that the municipal elections that have just taken place, for example, must have brought in new managers, they must have put new managers into power. What we need is up to date people, people who understand how to drive the economy at the grassroots level, which by the way is the most difficult level in this sense.

I met this week with representatives of the municipal authorities in Tula, and let me tell you frankly that I really enjoyed this meeting. These are animated, up-to-date people who were elected only very recently, on 1 March, people who are working in various fields. They are doctors, teachers, managers of small businesses, people who actually walk the earth so to speak, people who are aware of the problems that exist in the villages and small towns. Talking to them showed me how gifted they are. It is no accident that they have found their way into government. I hope that most of those elected, the majority of the new deputies, will be the same. By the way, I plan to organise this sort of meeting in different regions on a regular basis.

Of course there are other examples, and when I met recently with the Chairman of the Central Electoral Commission we talked about them. Unfortunately, there are cases where those involved in the first crime wave were elected deputies, people who in the 90s made their fortunes - small and large - and move aggressively into government. It has to be admitted that lately we have been able to pretty much clean up management personnel, and now this kind of people at the federal level and at the regional level is more or less non-existent, but at the municipal level such cases still do exist. And we need to monitor very carefully where their wealth came from, what these people do as deputies and what they did previously. The more deeply we look into these problems, the better our deputies and our government employees will be, the more effective they will be. And I myself intend to make this my top priority.

KIRILL KLEIMENOV: In the course of your recent discussions with representatives of municipalities in Tula did you feel they were addressing the issue of combating corruption? How did they respond?

DMITRY MEDVEDEV: You know, Kirill, for them this issue is a great trial, because they are exposed to all kinds of controls and attempts at extortion of bribes, and they have to deal with local bosses who drop in and say: "You have to share the money with us." Therefore there's no need to force these people to join the campaign against corruption, they themselves discuss this issue quite openly. The higher up you go, the more difficult it is to get people to speak openly, but with these people it was very simple. They say: "Well, the police come along and tell us that we have to do this or that, or else we'll suffer. We have to pay. Then the firemen arrive and the same thing happens, then the local boss drops in and again we are supposed to share with him." We need to respond immediately to this sort of thing, because corruption starts from the bottom and works its way to the top, and we need to chop off its roots, because when people see these things happening everywhere, they throw up their hands.

KIRILL KLEIMENOV: Now if you like we can talk about the crisis. By virtue of its support for the economy, the state is in effect helping hundreds of thousands if not millions of people who are employed in enterprises that are strategically important for the country. But perhaps the state cannot bear the burden of this support, the burden of this assistance all by itself. Which brings up the role of business: how do you see its role in terms of support for people?

DMITRY MEDVEDEV: You know, I think that the role of business in a crisis situation cannot be confined to what it normally is, business development, increasing production.

KIRILL KLEIMENOV: Making a profit.

DMITRY MEDVEDEV: Making a profit, yes. That is absolutely right. It has a moral role to play too. Our business has developed very quickly. And because of this it has acquired an enormous amount of auxiliary capacities. Perhaps nowhere in the world has business developed so quickly in recent times as it has in our country. To put it simply, people became very wealthy in a very short time. Now it's time to repay debts, moral debts, because this crisis is a test of maturity. If a person really has become a businessman, he knows how to value his employees. He will try perhaps to put aside some of his proposals, some of his ideas or his own personal consumption for later, and keep the team that works for him together, pay their wages, and safeguard what he has built up in recent years. But if a person starts to get all twitchy, if he sells his business and runs off somewhere, that shows that he is not a real entrepreneur. He has simply looked after his own affairs and now decided to rid himself of them. And in this sense we are probably going through a period of this sort of cleansing: someone who endures the crisis is in the best sense of the word an effective entrepreneur, an effective manager. And I think that this is very important.

By the way, if you want me to talk about how these procedures can be monitored, we just talked about this, an idea came up a while back concerning the creation of an institute of special representatives in the commercial banks. I specifically promoted this idea and the law was passed. Such representatives will be functioning in the largest commercial banks. I think this is very important because they will be watching to see how business is developing today in the banking sector. They will give their consent to certain transactions, make sure that loans are made in acceptable, normal market conditions, without involving any gifts or other unspeakable acts that unfortunately occur periodically in banking transactions. Loans must be carried out according to normal market conditions, and not involve kickbacks or other future benefits of any kind. In this regard, I believe that this supervisory institute is necessary at this time.

KIRILL KLEIMENOV: Are we talking about the representatives of the Central Bank?

DMITRY MEDVEDEV: We are talking about representatives of the Central Bank within commercial banks.

KIRILL KLEIMENOV: When will this institute go to work?

DMITRY MEDVEDEV: They are already present in commercial banks, in fact, they are already hard at work.

KIRILL KLEIMENOV: In our country it is the older generation that has had to live through a great deal: the war, the post-war famine, monetary reforms when an entire life savings were devalued in one night. Of course middle-aged people were fortunately not affected by these hardships, but they also have something to remember, the devastation of the 90s, for example. But in one way or another these generations have become hardened, whereas this is probably the first time that the younger generation has confronted the challenges brought about by a financial crisis. Are you not afraid that today young people will experience their own frustrations and somehow get lost?

DMITRY MEDVEDEV: You know, for several reasons I don't think that this is such a pressing problem. First of all, young people are still the most energetic, the most motivated part of society and they are not so easy to break.

And secondly, the level we are starting from is significantly different from what it was in the 90s. We both remember what state the country was in, what the economy was like, what happened in one day in 1998, when virtually everyone in the country felt robbed. And in this sense a better starting point already gives us a certain security. Therefore, I do not have special worries with regard to young people. Of course this is a test of strength. It is absolutely obvious. But I can also say that the older generation and the middle generation should not feel like they are once again in one of life's most difficult situations. Yes, the crisis is not making anyone happy. It causes stress and discomfort for everyone. But of course we will not allow what happened in the late 80s and 90s to happen again. We have a fundamentally different economy and, most importantly, a different attitude to the social obligations of the state. What happened before will not be repeated.

KIRILL KLEIMENOV: But with regards to support for young people. I'll ask a question that worries not only young people but their parents as well. If I'm not mistaken, about one million and 300 thousand students are preparing to graduate soon from Russian universities.

DMITRY MEDVEDEV: Even one and a half million.

KIRILL KLEIMENOV: One and a half million graduates. And this year will probably be the first one when work is very difficult to find. There are estimates that about half of the graduates who have been in education full-time will not be able to find a job immediately. What can the state do to help fix this situation?

DMITRY MEDVEDEV: Indeed, this is an important issue.

In light of the fact that finding jobs is not always easy, our government cabinet has prepared a special resolution on this matter. The Ministry of Education has prepared a plan for the employment of young professionals which involves several things. There are those who, shall we say, fit a company's criteria, and those who studied while they already had a contract, and these groups should be hired. But in addition there is also the option of quickly retraining certain people so that they have new, in-demand skills. There is the possibility that some people and students who wish to continue their education go to PhD and master's programs, because when choosing between a difficult life and further education, of course I hope that a significant proportion of students will choose to continue their studies. This is also an extremely serious position which we will be sure to work on.

Finally, there is another good idea. It is to create special small enterprises linked with universities as well as colleges, which in Russia are very often together with universities, and this legislation has already been introduced to the State Duma.

KIRILL KLEIMENOV: And if you had to make a general prediction about unemployment in the country what would it be?

DMITRY MEDVEDEV: As you know, the employment situation is difficult, but in general it is under control. Although recent figures show significant increases: over the past five months an additional 200 thousand people were officially registered as unemployed. In total, the number of registered unemployed in our country is about 2 million. And this is not taking into account actual unemployment, i.e. all the people who are intensively searching for a job...

KIRILL KLEIMENOV: But who are not registered as unemployed.

DMITRY MEDVEDEV: That's right. If you add together those who are not registered as unemployed and those who already are then using the methods favoured by the ILO we get to a figure of about 6 million, that is the total extent of this scourge in our country; it is somewhere around there.

KIRILL KLEIMENOV: This is the first time we've heard this figure.

DMITRY MEDVEDEV: Yes, that figure is probably being expressed for the first time, although it is not a secret 'behind seven seals, beneath seven locks', rather it is the number of jobless people today. I would stress that this is an estimate done by experts. And of course this is a reason to implement the most varied programmes, those that, in effect, are now being implemented in our country. I am referring to support programmes at the federal level on which about 43 billion roubles of federal funds are now being spent, and the 43-odd billion we have allocated for co-financing regional programmes.

KIRILL KLEIMENOV: I would ask you to return to the topic of education and say a few words about paid education because the crisis has badly affected people who fund their own studies. There are many in our team here too. You met recently with the Minister of Education and gave him specific instructions. When can we expect the final decision?

DMITRY MEDVEDEV: These orders must be executed as soon as possible. I will just say a few words about the current situation. I actually gave such orders and identified specific dates. I would like to inform all concerned people of the following. As to those who are paying for their studies and would like to benefit from state funding, the Ministry of Education has written a letter with recommendations that should apply to all educational institutions, as per my instructions. So in that sense all the necessary documents have been adopted.

The same can be said about the other idea which was put forward. It is connected with making a transition to financing studies with credit; I am thinking of student loans. In a short time, I think during the next 10 days, the Cabinet will prepare the appropriate document and this will be adopted when we make decisions regarding the federal budget. Therefore, the orders I gave to the Ministry of Education which affect students paying fees will be executed.

KIRILL KLEIMENOV: This is important information.

Dmitry Anatolyevich, prices are rising, food is becoming more expensive, as is medicine. And if this is understandable with regard to imported drugs, it is unbelievable for domestic ones.

DMITRY MEDVEDEV: Yes, this is a big problem. Indeed, the rise in prices of imported drugs is more or less understandable and does not make anyone happy, but at least there is an explanation. And it is unacceptable when drugs made from Russian raw materials by Russian enterprises become more expensive.

By the way, imported drugs must be dealt with very carefully because it is one thing when their value varies in proportion with the exchange rate and inflation, this at least has an economic explanation, but is another thing when prices rise excessively. That is simply an attempt to cash in during difficult times. I cannot call it anything else.

And given the fact that our regional authorities are working on all these issues in the regions, I would like to specifically draw their attention to the fact that all sorts of intermediaries who work in the regions should have a conscience. And the task of governors is to ensure that the profits these intermediaries make on imported and domestic drugs are reasonable. If they do not, this will be dealt with by law enforcement agencies. I can promise you that.

And there is another thing that of course must now take place. We must become familiar with the range of medicines that are produced using our raw materials, in all the various products created by our companies. How is this to be done? Of course to do this we need to look at the whole range of drugs that we import and those we produce today, and if possible transfer the production of a number of drugs to our own country.

Moreover, we have almost no control over pricing, and the controls are carried out only for those who come forward. I think that we should now make a decision on the obligatory declaration of the wholesale price for the most important drugs in the commercial pharmacy network. In this way, on the basis of such declarations, for imports of the relevant products, or domestic prices, prices for the producers, we will get a more or less clear picture of how much a drug costs. And this sort of decision should be prepared. So this is another means of responding to the problems that exist today concerning the pricing of drugs.

And, finally, the last thing. The state will definitely follow up on this and provide full financing for the supply of free drugs to the major groups that need them. I am referring to the seven major diseases, the so-called nosologies provided for by federal funds, and those drugs that are currently funded and delivered free of charge by the regions.

You know, I think this is such an important issue that we could devote a separate conversation to it: the state of medicine in our country in general and during this crisis. To talk about everything: how medical services are provided, what the problems are, and again how drugs issue might be resolved. And I intend to do this in one of these meetings.

KIRILL KLEIMENOV: From what you're saying, we can clearly infer that the state will not tolerate the uncontrolled growth of drug prices.

DMITRY MEDVEDEV: The state has no right not to monitor this issue: it affects the lives of vast numbers of people.

KIRILL KLEIMENOV: Dmitry Anatolyevich, even from this conversation we can conclude that the current situation is perhaps going to be a very important and protracted test of the strength of the entire system of state power. How would you assess the first results of this test?

DMITRY MEDVEDEV: You know, I have to agree with you that this is a sort of endurance test and that this test is going to last more than a few days or a month.

As regards the current situation, I believe that on the whole we have made quite an adequate response to the crisis that has occurred. But that does not mean that we can now relax and say: "Well, we have worked out support mechanisms for several major companies, provided a number of subsidies, work on unemployment and everything will be fine." First, we must not say such things because we don't know, nobody knows how long this crisis is going to last. And we are not immune to all sorts of changes, including the unpleasant ones. Second, we have a lot of problems so nobody can relax, and of course first and foremost the authorities should not relax, those responsible at the federal, regional and local levels. Our task is to work hard every day, to work on the problems that this crisis has created, and then we will be able to cope with it.

KIRILL KLEIMENOV: Thank you for this conversation.

DMITRY MEDVEDEV: Thank you.

***

At the end of a conversation the President answered a question about Moscow's priorities at the forthcoming G20 summit in London:

DMITRY MEDVEDEV: We have been developing our position for quite a long time now together with our partners, our colleagues. First, we would like the general stabilisation of the situation in the financial sector, namely the introduction of measures to create a modern financial architecture. And architecture which is appropriate for the twenty-first century, rather than a reproduction of that of the postwar period. In doing so we will have to change a number of key things, including the work of international financial organisations. They are already established, they have special rules that govern their work, they make a lot of decisions in very different areas, but the current crisis has shown that their activities — the activities of the International Monetary Fund, the World Bank and other structures - are far from ideal. Therefore, these activities should be streamlined and become fairer to those states that have recently emerged as major economic powers and those with developing economies; I am referring to Russia and other countries we cooperate with in this regard. So one priority is the reform of international financial organisations.

Another important issue is monitoring the macroeconomic indicators of countries that have an impact on the global financial situation. So that problems that occur in one state do not create a severe domino effect, when someone issues a huge amount of mortgage loans and it infects the entire global economy. In this respect we need mechanisms that will allow us to have at least some influence on the decisions our partners make and, on the other hand, to protect ourselves from this kind of knock-on effect. This is also a very important thing.

There are issues relating to auditing and accounting. There should be clear, good, fair rules that suit everyone, rather than ones that suit a group of states, even if they are very developed ones.

Therefore in general, if you ask what we are proposing, it is simply a more equitable international financial system. In principle all states are talking about this. The issue is where to put the emphasis and whether we want to move forward or simply remain stuck in the situation we have today. Our position is that we need to move forward. I hope that this position will be well-received by our partners during my visit to London for the G20 summit.

We must formulate fundamental provisions and harmonise our positions and the follow-up work conducted by experts, heads of ministries and departments should result in the creation of a number of new international conventions. And in this sense I hope that we will be able to agree, because otherwise we will face this kind of problem perhaps not every year, but definitely every 10 to 15 years.